Public and private cooperation
Today the cost for the industry of emitting CO2 is much lower than the cost of implementing CCS. In addition, other barriers for investments in CCS exists which means that both subsidies and cooperation between government and industry are necessary to realise a demonstration project as ambitious as Longship.
Part of any experience is of course trying, failing, learning from those mistakes and trying again until you succeed. Norway’s experience of planning full-scale CCS projects which were not fully realised led to a new framework for full-scale CCS in Norway. Gassnova’s pre-feasibility report “Study report on potential full-scale CCS projects in Norway” from May 2015, identified several emission sources and storage sites that may be technically feasible for CCS and industrial players which may be potential partners.
Most importantly, the study identified key investments barriers for the industry, risks to the project and a proposed way forward.
Dividing the chain
One lesson that has been learnt from trying to establish European CCS projects is that it can be challenging to build commercial models that span more than one industrial sector. For this reason Norway has decided to divide the CCS chain and establish separate agreements within each element.
“As a result, industrial partners will not bear risk related to other parts of the CCS chain other than their own area of responsibility.”
Longship consists of potentially two capture actors, Fortum Oslo Varme and Norcem-Heidelberg Cement, and one transport and storage actor, the Northern Lights consortium (made up of Equinor, Shell and Total). Each of the three actors has separate agreements with the government to avoid cross-chain risk.
Read more about Longship at the Government’s website.
This fail safe mechanism is essential in building confidence in Longship’s viability. Gassnova is responsibile for coordinating the industrial participants across the links in the chain. This includes ensuring the overall design of the chain, interface management and schedule management.
Sharing cost and risk
If the project is realized, the Norwegian state has agreed to provide the industry partners with subsidies for capturing, transporting and storing CO2.
Both CAPEX and OPEX are subsidised. According to European Surveillance Authority up to 100 percent of the costs can be subsidized. However, there is a cost and risk sharing between industry and government.
“Each company will develop their project according to their own procedures and methods and each company will own and operate their facilities.”
Overall responsibility for Longship will reside with a steering group, made up of members from both Gassnova and the Norwegian Ministry of Energy and Petroleum.
Gassnova’s role has been to lead overall planning of Longship, while managing the study contracts with the industry partners. Gassnova’s planning objective was to integrate and optimize the CCS chain, including the interfaces between the industry partners. When the FEED studies were completed, Gassnova evaluated the industrial projects and provided a recommendation to the Government.
Finally, Gassnova has a responsibility for disseminating the outcomes of Longship in order to ensure that the overall project goals are met. This is referred to as “benefits realisation”. All parties involved in the project contribute to this work.